Peter F. Swan

Empirical Evidence of Toll Road Traffic Diversion and Implications for Highway Infrastructure Privatization

Little scholarly empirical work measures truckers’ elasticity of demand for limited access toll roads. How do truckers respond to pricing signals? As price increases, how extensively do truckers divert from limited-access highways to secondary roads? At what price does this diversion impose costs on secondary highways? Using a unique data set, this article demonstrates empirically the extent to which pricing leads to diversion. Diversion is substantial, and elasticity becomes increasingly negative with higher tolls. This has significant policy implications. The diversion of large trucks probably creates an externality that, if it were priced, might cause the benefits of tolling to outweigh the costs. This diversion may have a safety cost because secondary roads are inherently less safe than limited-access divided highways. In addition, second-best truck routings may introduce costly deadweight losses to the economy, damaging interstate commerce. Profit-maximizing toll road operators might exacerbate this diversion to the detriment of public welfare.

Extending landed cost models to improve offshore sourcing decisions

Purpose – The purpose of this paper is to identify the components required for more robust landed cost models given the now widespread interest in sourcing finished goods, components for assembly, and basic raw materials from global sources. This study also seeks to establish the need for broad‐based participation in operationalizing such models.Design/methodology/approach – Interviews are conducted with several major firms that import a range of merchandise into the USA to develop in‐depth case studies. A taxonomy of variables found in increasingly comprehensive forms of landed cost models is developed from the case studies. These variables are assembled into modules and analyzed with the use of an expert panel consisting of executives responsible for import activities at major firms.Findings – Most major firms are relatively unsophisticated in their approach to making offshore sourcing decisions. Few employ models that are sufficiently detailed and some do not even embrace the basic logistical elements ...

Supply Chain Security: Agency Theory and Port Drayage Drivers

Supply chain security presents numerous challenges to governments interested in defending against terrorist threats. While most approaches stress technological solutions, scholars and policy-makers tend to overlook economics, labour market issues, and industrial relations. Applying agency theory from behavioural economics, this article analyses threats to the US supply chain and opportunities for efficient solutions. Using data from a sophisticated web-based survey of owner-operator cost-of-operations, it shows that drayage drivers are among the lowest paid truck drivers and workers in the US. We provide evidence that low pay is associated with both safety and security risk. Low-wage labour and subcontracting present challenges to US and foreign supply-chain security because the market attracts workers who have few other employment options. In this environment, principals and agents currently make inefficient and inequitable contracts because markets do not reflect the complete costs associated with low-probability/high-impact events like cargo theft and transport security.

U.S.-Japanese Manufacturing Equity Relationships

We explored the differences between the joint venture, total ownership, and partial equity positions used by Japanese companies investing in U.S. manufacturing via a secondary data analysis. Partia...

Tolling and economic efficiency: do the pecuniary benefits exceed the safety costs?

This article uses crash data, highway classification, and traffic statistics to estimate the crash cost per truck vehicle mile traveled (VMT) from 2002 to 2006 for trucks that diverted from the Ohio Turnpike to avoid paying higher toll rates imposed by the Ohio Turnpike Authority. The data show that the truck crash cost per VMT is lowest for rural interstates such as the Turnpike and highest for the roads to which truck traffic diverted. Using the elasticity of demand for truck use of toll roads, we then estimate that the crash cost of trucks diverted from the Ohio Turnpike to other roads during 2004 at more than US

CUTTING LOGISTICS COSTS WITH OCEAN CARRIER SELECTION

38 million, which far exceeds the revenue benefit. The article discusses implications of these results for road infrastructure pricing.